![]() ![]() might default on its debt dealt a major blow to the stock market, Summers said, a history he’d rather not see repeated. “We got downgraded and we haven’t been upgraded since.”īut another lasting consequence of the 2011 debt ceiling fight was that the possibility the U.S. ![]() “We still have a lower credit rating as a country, because we came close to the debt limit and default in the 2011 period,” Summers said. The ceiling was raised in exchange for large spending cuts, although the standoff still resulted in a downgrade for the U.S. The last time it happened was in 2021, although Summers compared the current standoff to a 2011 debt ceiling fight, when Congressional Republicans and the Obama administration raised the limit on July 31, just days before the Treasury estimated its borrowing authority would end. politics-despite many calls, including from current Treasury Secretary Janet Yellen, to abolish the 106-year old tradition. With the government required to raise its borrowing limit as the economy grows, debt ceiling debates are a long-standing fixture of U.S. I hope it ends as soon as it possibly can,” he continued. “I just think this is a foolish exercise. That might turn out okay if you do it, but why would you try that kind of experiment?” Summers said in an interview with CNN Tuesday evening. “It’s an experiment, but it’s one of those experiments like taking a wander with your eyes closed in traffic. But for Summers, playing the debt ceiling card this close is a plan with zero upside and far too many risks, as historical precedent suggests waiting until the eleventh hour could deal a major blow to financial markets and the global position of the U.S. is already over budget and should cut borrowing, although lawmakers have long used the debt ceiling as a tool to achieve policy goals, especially when their party is not in the White House. risks defaulting on its debt, imperiling government programs, financial markets, and the dollar’s role in the global economy.Ĭongressional Republicans argue the U.S. The government has been operating on “extraordinary measures” ever since, but those are about to run out, possibly as soon as June 1, after which the U.S. government can borrow to pay its bills, has been dragging on since January, when total national debt hit the current ceiling of $31.4 trillion. The debate over whether Congress will raise the debt ceiling, which limits how much the U.S. ![]()
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